What is equipment finance?
Equipment finance is a way to avoid the large upfront cost of new equipment purchases, by spreading the cost over affordable monthly payments. This means you can get what you need now, capture immediate opportunities and start generating revenue then repay the funds whilst your business earns additional income.
How does equipment financing work?
An equipment finance agreement typically involves a lender purchasing the asset you need, then loaning it to your business whilst you repay the item’s value plus interest. The funds are borrowed under one of two types of agreement, an equipment lease or a hire purchase agreement.
Our account managers will discuss your needs with you, seek funding on your behalf and if accepted will arrange for the asset(s) to be bought and delivered to you. Once the agreement is activated, you’ll start making repayments for the duration of the agreed term.
What sort of businesses use equipment finance?
Portman has been supporting UK SMEs for over 15 years, working with established businesses and start-ups, micro businesses through to household names, across every sector of the economy. Equipment finance is a popular way to buy new assets across many industries. Common users include:
How long can you lease equipment for?
Equipment finance agreements are usually between 2 and 6 years. There are exceptions where the term may be extended to 7 years and rare examples of terms up to 10 years. The length of the term affects both the monthly repayment and the total amount of interest payable. To see examples of how an agreement might work for you, try our equipment finance calculator.
Equipment leasing vs buying
When considering whether to finance or buy equipment, each has pros and cons. Buying outright means you pay no interest and always own the item. However, you need to take a huge chunk out of your free cash to pay for the asset, cash that could be needed for operational costs and emergencies. You might also have to save up, which could mean missing out on opportunities. Using finance will ultimately cost more, but allows you to spread the cost into more manageable monthly payments. It doesn’t tie up your cash and allows you to generate additional revenue without that one-off hit to your bottom line. Finance also allows you to unlock some tax advantages.
Equipment finance takes 2 forms; a lease has little upfront cost and allows a regular monthly lease fee. At the end of the primary term you can continue to lease the asset, arrange to give it back/sell it, or request to buy the item outright for a fee. A Hire Purchase (HP) agreement requires that you pay both a larger deposit and the VAT upfront, but after the term you have guaranteed ownership of the asset.
What sort of equipment finance do you offer?
Equipment finance is usually divided into Equipment Lease Finance and Hire Purchase.
Hire purchase usually requires the VAT to be paid upfront alongside a larger initial deposit. At the end of the term, the customer will buy the asset through a nominal fee or balloon payment, depending on the chosen option.
Lease finance is a rental agreement, so the payments can normally be deducted from company profits before calculating tax. This means only interest payments can be deducted from company profits. With lease finance, deposits are not always necessary, the interest and VAT amounts are also included in the monthly fee. At the end of the term, the customer can keep renting, give the item back to the lender, or often arrange to purchase the item for an additional fee.
Can I get equipment finance for a start-up business?
New businesses can take out equipment finance and often find it easier to do so than obtain a business loan. Start-ups carry a larger risk than established businesses and so equipment finance, being secured on the asset itself, reduces the risk for the lender, meaning they may be more likely to offer finance this way. Start-up businesses that often need funds to get going include those with a commercial kitchen, gyms, construction firms, technology-based businesses and farms.
Benefits of Equipment Finance
- Buy what you need now
- Make repayments whilst generating income
- Spread your costs with fixed monthly payments
- Potential tax advantages
- Avoid price inflation
- Preserve cash for operational costs
- Enable business growth
- Secure fixed competitive rates
Why Choose Portman Finance Group?
At Portman, we are proud to offer a personal and professional service. Plus, since 2007, we have sourced over £1 billion in funding. So, whatever your business finance needs, we’re likely to be able to help.
Our clients love working with us because;
- We can finance most types of equipment
- We take time to understand your business and secure you the right loan
- We may offer finance even when others cannot
- We will do our best to help even if you don’t have a strong credit history
- You will have one point of contact from start to finish
- We provide solutions quickly, sometimes within hours
Want to know more? Get in touch today.
We are AlphaGeo Ltd’s trusted finance partners!
By partnering with a trusted and experienced finance provider, customers of AlphaGeo Ltd have been able to finance any tech upgrades and Drone/UAV, Underwater Drone, Survey, and Software Equipment purchases.
As both a lender and broker, Portman has offered fast and flexible equipment finance and leasing options to companies such as Water Treatment Services, Caving Suppliers and Emergency Services to help expand services and upgrade their equipment.
By using finance to purchase top-of-the range equipment from AlphaGeo Ltd, these businesses have been able to obtain critical equipment to meet customer demand, then spread costs over affordable monthly payments, all without affecting their cash reserves.
What can be financed?
We can fund almost any equipment, be it a traditional ‘hard’ asset such as machinery, tractors, forklifts and vans, to more ‘soft’ assets such as IT software, office supplies, gym equipment and furniture.
We’re able to finance assets in almost any industry, not just the ones listed on this site, so whatever asset you need to move your business forward just contact us and we’ll be happy to help.
I thought finance was just for people who can’t afford to buy?
Equipment finance is designed to spread costs over a period of time, whilst your new equipment generates revenue. Using your business’ cash or credit card and buying outright can mean that there’s no free cash for emergencies or to cover fluctuations in demand. Using finance helps even out the monthly budget and choosing a lease finance or hire purchase deal allows you to treat tax in different ways, which may suit your business better.
Isn’t it cheaper just to go to a lender direct?
Whilst banks can offer different rates, they often reject certain types of purchase or businesses in certain industries and can also have strict lending criteria. At Portman we deal with a panel of over 40 lenders as well as funding businesses with our own money through Portman Leasing. We have access to specialist lenders and specialist types of finance, giving a variety of options and a greater chance of acceptance.
Portman can compare the market through our panel of lenders and may have rates that are not available to a customer who goes direct. We also have access to many specialist lenders that are not available to customers directly and can even put together finance packages from multiple lenders. All of which gives you competitive rates, with a greater chance of acceptance.
How long will I be paying back the finance?
Terms are typically available for up to 6 years but agreements as long as 10 years are possible in certain circumstances. Options available to you may be dependent on the circumstances of your business or the equipment being financed, but then the final choice is up to you.
What are the minimum and maximum amounts I can borrow?
We usually finance business equipment between £10,000 and £2,000,000. The amount available to you depends on the strength and trading history of your business as well as how much you would like to borrow.
Do you provide finance outside the UK?
Portman can only finance companies registered and operating in the UK, however, we can work with European suppliers to help fund equipment from international manufacturers.
Does the business actually own the equipment with asset finance?
With asset finance, the business’s ownership of the equipment depends on the chosen arrangement. In a hire purchase, ownership is transferred to the business after completing all payments. However, in a leasing agreement, ownership remains with the finance provider during the lease term, and the business may have the option to purchase the equipment at the end of the lease or return it.
What is the average interest rate on equipment financing?
The average interest rate on equipment financing can vary depending on factors such as the business’s creditworthiness, the type of equipment being financed, and the current market conditions.
Is equipment finance considered debt?
Yes, equipment finance is considered a form of debt. When a business obtains equipment finance, they borrow money from a lender to acquire the necessary equipment. The business then repays the lender over time, typically with interest, until the full amount is paid off. As such, equipment finance is a liability on the business’s balance sheet until the debt is fully settled.
However, it’s worth noting that equipment financing can be a valuable tool for businesses to acquire essential assets without bearing the full upfront cost, and when used correctly, it can aid rather than hinder the business’ financial standing and future.
What sort of equipment can I finance?
Businesses can finance a wide range of equipment using equipment financing. Common types of equipment that can be financed include machinery, vehicles, technology and IT equipment, construction equipment, medical equipment, manufacturing tools, office furniture, and more. The specific equipment eligible for financing may vary depending on the lender and the industry, but in general, businesses have a broad selection of equipment options available for financing to meet their operational needs and growth requirements.
Our experts can find the right funding for you.
Excellent communication and help throughout the process. Easy and prompt emails. Highly…Daniel Cooper
Portman and the entire team are great to work with, know their lenders and products incredibly…Marney Howe
Very smooth operation
I have now dealt few times with Portman Finance and it has always been very smooth and…Anthony ienco
We used Portman Finance to secure finance for a new restaurant we are opening. Jack Weston…David B
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